Targa To Buy Atlas Energy And Atlas Pipeline In About $7.7 Bln Deal

(RTTNews) - Targa Resources Corp. (TRGP) and Targa Resources Partners L.P. (NGLS) agreed Monday to acquire Atlas Pipeline Partners, L.P. (APL) and Atlas Energy, L.P. (ATLS) in two separate deals totaling about $7.7 billion. The deals are contingent on one another, and are expected to close concurrently, now anticipated in the first quarter of 2015.

"Both the Targa and Atlas management teams and our boards view this integrated transaction as a highly compelling strategic opportunity to combine two outstanding midstream businesses and create value for all shareholders and unitholders. We believe the combination provides our customers an enhanced midstream service offering, and presents our investors with an enterprise that has increased scale, diversity and growth," Targa CEO Joe Bob Perkins said in a statement.

In the first of the two deals, Targa Resources Partners will acquire Atlas Pipeline Partners at $38.66 per APL common unit for a total consideration of $5.8 billion, including $1.8 billion of debt. The deal will see APL unitholders receiving 0.5846 units of Targa Resources Partners and a one-time cash payment of $1.26 per APL common unit.

Targa Resources Partners will also redeem APL's Class E Preferred Units for an aggregate amount of $126.5 million in cash. It The expects to finance the cash portion of the deal with borrowings under its revolving credit facility.

Following the closure of the deal, current Targa Resources Partners unitholders will own about 66 percent of the pro forma combined partnership and current APL common unitholders will own about 34 percent. The closure of the deal is subject to the approval of the holders of a majority of the limited partner interests in APL.

The second deal will see Targa Resources acquiring ATLS, following the spin-off of its non-midstream assets, for total consideration of $1.869 billion, including 10.35 million TRC shares and $610 million in cash.

Following the spin-off, ATLS assets will consist of its interests in the general partner and incentive distribution rights in APL, as well as 5.8 million APL common units.

Targa Resources has arranged committed financing of $1.1 billion to replace its existing revolving credit facility and to fund the cash components of the deal, including cash merger consideration and $149 million related to change of control payments.

Following the closure of the deal, Targa Resources shareholders will own about 80 percent of the pro forma shares outstanding of the combined entity and current ATLS unitholders will own about 20 percent.

The closure of the deal is subject to the completion of the spin-off and the approval of the holders of the limited partner interests in ATLS and the holders of the shares of common stock of the company.

The Boards of Directors of all four companies have each approved the respective merger agreements, and they have also voted to recommend the deal to their unitholders and shareholders.

Following the closure of the deals, Targa Resources Partners LP expects 11 to 13 percent distribution growth, and Targa Resources Corp. expects about 35 percent dividend growth in 2015. Targa Resources Corp. also expects $1.00 to $2.00 per share dividend accretion over the long term.

In Monday's regular trading session, TRGP is currently trading at $124.39, up $2.74 or 2.25% on a volume of 0.81 million shares, and NGLS is trading at $63.54, down $0.44 or 0.69% on a volume of 28,358 shares.

ATLS is currently trading at $40.10, up $7.69 or 23.73% on a volume of 0.51 million shares, and APL is currently trading at $37.39, up $3.77 or 11.21% on a volume of 0.12 million shares.